Why can't energy firms pick up the bill?

Demands grow for windfall tax as fuel companies rake in record profits

Published Tue 26 Aug 2008

Issue No. 2116

'British economy grinds to a halt' cried the headlines last weekend. Charles Bean, the deputy governor of the Bank of England, said the current economic downturn could 'drag on for some considerable time' – especially since there always seemed to be 'another grenade' waiting to explode in the financial markets.

'We've got our fingers crossed that things will improve,' Bean added. Most people might expect a little more reassurance than that. In the good times the bankers told us that the free market ruled. Now they admit that its workings are down to chance.

A recession will bring higher unemployment and further attempts by bosses to cut wages in order to maintain their profits. Meanwhile they are going full steam ahead with their own prices rises on everything from water to food to public transport.

Gas prices have doubled since 2000. Electricity has gone up by nearly two thirds over the same period. Every week new figures show price rises that will hit working people and the poor the hardest.

Around 80 Labour MPs have now signed a call for Gordon Brown to impose a windfall tax on the big energy and fuel companies. That is the very least he should do. These firms have been forcing up prices while still raking in huge profits.

A recent poll showed that 70 percent of people believed their household economic wellbeing had got worse over the past year. Only 5 percent said things had got better. Higher taxes on the corporations – including a windfall tax – would begin to redress this.

But there is little sign that Brown will take notice of the plea from his own party's MPs. Nor is he likely to listen to campaigners, trade union leaders, local councillors and academics who have backed the call for a windfall tax.

The fact is that Brown is too frightened of upsetting big business and their friends in the media. In every policy area he has stuck closely to the path mapped out by Tony Blair – even though this has led to a collapse in Labour's support.

Brown may pay the price for his refusal to help those who elected him. But we need to make sure it's the big companies that pick up the bill – not the poorest and working people who are being expected to pay for this crisis.